Astonfield Renewable Resources, Ltd.

1. Astonfield Renewable Resources, Ltd. Developer’s perspective on an enabling framework for renewable energy November 2009 Ravi Raina

2. INDIA’S POWER SECTOR : POINTS TO PONDER • Current power mix is fossil fuel dependent and has following negatives • Price volatility/ subsidy dependent • Energy security • Impact on environment • Long gestation period • Utility scale “carbon-less” SOLAR POWER, with NIL environment impact is need of the day to support • Sustainable rural development (electricity in rural areas) • Use existing T&D network • Decentralized power generation at remote locations across the country • Replacement for existing DG sets being used for irrigation where subsidised cost is Rs 15 /kwh India’s Installed Generating Capacity Total = 147,716MW Utility scale solar power addresses India’s growing energy needs

3. Solar power will be a significant source of global energy mix in future , with critical mass building after reaching grid parity Geothermal 1,600 Other renewables Solar thermal (heat only) 1,400 1,200 Solar power (photovoltaics and solar thermal generation) 1,000 Primary Energy Use (EJ/a) 800 Wind 600 Biomass(advanced) Biomass(traditional) 400 Hydroelectricity Nuclear Power 200 Gas Coal Oil 0 Solar subsidies required Solar hits grid parity Solar cheaper than conventional energy 2000 2010 2020 2030 2040 2050 2100 Source: Climate Change

4. Key issues impeding the growth of solar program Affordability of power (Outlook on grid parity) Industry players (across the value chain) Government Policy environment (subsidy) Open access to consumers Ground level issues (land, permitting) Regulatory Framework (RPPO, tariff orders) Central / State government need to support the solar program by way of feed in tariff subsidy and regulatory framework till grid parity is achieved

5. Holistic lifetime cost comparison of solar versus conventional energy (Rs. / kWh) for 1,000MW 8.93 Healthcare (12.5 L people impacted) 0.03 Water Cost O&M Escalation Component 0.84 Rural jobs created (2.5 L jobs) Fuel Escalation Component 22.56 3.58 12.40 17.00 Transmission & Wheeling Charges 0.68 PEAK POWER Peak power premium 5.00 Effective solar tariff 3.50 Base Thermal Tariff 4.60 Solar Tariff Conventional Tariff Source: Astonfield analysis / Public data

6. With government support starting in 2009, solar can achieve Peak Grid Parity as early as 2013-15 PHASE II (Post- Govt Policy) PHASE I (Govt Policy very important) 7% 6% Peak Electricity Prices (Rs/kWh) 5% 4% Convergence / Peak Grid Parity India – Estimated price of peak electricity today: Rs. 6.50/KWh • Post 2013, India can substitute expensive sources such as diesel with solar to meet growing peak power demand • Astonfield estimates that base load grid parity can be achieved by 2020-23 - beyond that point, abundantly available domestic solar power will be cheaper than imported coal, positioning India to be energy independent * * Assumes that conventional power tariff escalates at roughly 5-7% per annum Source: Stephen O’Rourke/Deutsche Bank / Astonfield Analysis

7. While Solar tariffs are more incentivized in Europe, large scale program can bring economies of scale to support low tariffs in India Comparison of Feed-in Tariffs Globally (INR per kWh) Scale of India’s Solar Program (MW) Two States have now established independently funded programs of 500MW and 50MW respectively In addition, Government of India expected to announce landmark 20,000MW solar program in 2009 15 -17 Rupees 22-24 Rupees 50MW experimental solar program announced by Government of India; more than 1500MW of applications 22-24 Rupees 2.5MW grid connected solar capacity in all of India 28-35 Rupees

8. CERC tariff determination guidelines is a step in the right direction… SERCs needs to keep the above factors into account, while adopting the CERC guidelines at State level

9. CUF needs to be customized for each state India’s Solar Radiation Map Varying solar insolation levels across the country (4-7 kwh / sqm/day) affects the project economics, hence CUF needs to be in accordance with insolation levels of each state

10. Solar RPPOs: Critical to Ensure Visibility of Solar Sector Growth to Attract Up-Front Investment The rationale for Solar RPPO Available Benchmarks • Demand is generated by State DISCOMs – in the absence of solar energy procurement targets, they will tend to opt for cheaper renewable power sources • In addition to targets, there must also be penalties on DISCOMs that fail to achieve these targets • Path to Grid Parity is dependent on creating visibility through RPPO to build manufacturer and developer confidence in economies of scale Global Experience EU : 20/20/20 (20% cut in emission norms, 20% renewable energy portfolio, 20% cut in energy consumption by 2020) Germany : solar accounts for 4% of renewable portfolio Indian Experience Gujarat : Solar specific RPPO ( 1.5% in 2009, increasing to 2.5% by 2011) Maharashtra : 0.5% CERC can play a critical role in guiding the SERCs to declare solar-specific RPPO targets

11. To realize potential of solar power, India should have capabilities across PV Value chain • Crystalline Value Chain (%) = relative weight of cost structure Polysilicon Ingot Wafer Cell Module Balance of System • 35% • 7% • 7% • 8% • 13% • 30% • Thin film Value Chain PV Raw Materials PV Deposition & Module Integration Module Encapsulation • Glass that is used as substrate • Thin-Film manufacturing line where deposition and integration take place • Schematic diagram of a CdTe module India can be a global solar PV manufacturer then presence across the value chain is imperative

12. TECH MANUFACTURING GENERATION Successful solar sector begins with robust solar policy and right regulatory framework stimulating demand for solar power generation 3. With an established downstream demand, investment in R&D and talent flow into the sector, helping India become a global solar technology hub Growth of the value chain begins downstream 2. As demand is created, a vibrant manufacturing base opens up, creating domestic jobs and fueling overseas exports • Drive manufacturing of all solar technologies and create export base market • Stimulating generation creates domestic demand for solar manufacturing and fulfills nation’s electricity needs • 15-20 GW of demand stimulation to attract large scale cost efficient manufacturing Stimulating generation lays the foundation for long-term viability of the sector

13. To realize the potential of the large scale solar program, a robust regulatory framework is a must at state level based on CERC notified norms Solar Program Development Required: Why this is necessary: Accelerate Adoption of CERC Guidelines at State Level • Gives developers and manufacturers line of sight to standardized project return expectations across States and facilitates early installations • In the absence of an RPPO mandate for PV solar , states will steer towards cheaper renewable energy sources and subsidies will be compromised Renewable Power Purchase Obligations • Development delays are costly barriers for developers - land assistance, permits should be granted through a single window clearance Ensure Administratively Simple Processes • Given fast implementation cycle for solar, serious developers can accelerate new capacity addition if subsidy process is streamlined Streamline Central Subsidy Application and Payment Process

14. Each State ERC can ensure strong foundations for solar sector rollout even as details of National Solar Mission become more understood • Initiate study to confirm CERC solar tariff guidelines (with adoption of specific CUF assumption for each state) • Declare a tariff for Solar PV (framework can be declared contingent on National Solar Mission subsidies) • Pursue allocation approach rather than competitive bidding in early years of the program (incubation is still required) • Declare an RPPO with solar-specific carve out • Work with Discoms to standardize bankable PPAs for solar projects <25MW The states that have already gone through this process or that can complete it by 1Q10 will establish early leadership of solar sector

15. India has a small window of opportunity to capture global attention on solar sector development • EUROPE • Spain has already cut back program • Germany should be a steady market but no more than 15% global manufacturing offtake • Italy potentially to re-evaluate feed-in-tariff in next 18 months CHINA Has declared target of rolling out 20GW of solar by 2020 but specifics on incentives and budget are still largely unclear UNITED STATES Still questions on budget /capital availability for solar rollout Global manufacturers are looking for a secure long-term market at the moment and will sacrifice margin for scale

16. Astonfield has become the largest diversified renewable energy company in India Jammu & Kashmir Phase I Solar Uttar Pradesh Phase I Solar / Biomass Haryana 3MW Solar • Total of 338MW solar project currently in the MOU/Allocation stage • Close to 1000 MW of pre-MOU opportunities currently in the public sector pipeline • Of that pipeline, at least 500MW expected to convert into formal concession by 1Q10 with remainder by 1Q11 • In addition Astonfield is in process of finalizing 400MW in pipeline from four leading industrialists in India under co-development structure Madhya Pradesh Phase I Solar Rajasthan 5MW Solar Bihar Phase I solar Bihar 100MW Biomass Rajasthan Phase 2 Solar West Bengal 2x 5MW Solar 10MW Biomass West Bengal Phase 2 WTE / Biomass Gujarat 200MW Solar Orissa Karnataka 10MW Solar Andhra Pradesh Karnataka Phase 2 Solar MOU/ Allocation Tamil Nadu Pipeline Initial Dialogue

17. THANKS FOR YOUR ATTENTION